Cryptocurrency mining has been very popular in the industry since the inception of Bitcoin in 2009. When it comes to mining, we know it has to do with a group of people who dedicate their time to make more of a digital asset available as they get rewarded in exchange of the computer power.
But in reality, it’s more than that. In the blockchain, all the transactions need to get verified and approved. The verification process is done by the miners, who are using their computing power solves complex mathematical equations. Once solved, it needs to be verified by the 51% of other miners before it gets approved and placed on the blockchain. Only then, the miner who solved the equation gets rewarded. If we were to understand how the ethereum mining process works completely, we would need to dive even deeper.
However, a number of people think all cryptocurrencies reward miners with the same amount of money. I beg to differ, this is not true.
Bitcoin, the King of cryptocurrency rewards its miners with 8× more profit than the rest of the cryptocurrencies. According to information, Bitcoin was rewarding its miners with a record amount of $580000 on 10th May 2019.
Ethereum is the next higher rewarding cryptocurrency and even that, it is 8 times less than the reward of Bitcoin miners. As of 10 May 2019, Ethereum was rewarding its miners with a transaction profit of $68,000. Litecoin miners, on the other hand, obtained a total of $1100 as of 10 May 2019.
Arguably, these are the most accepted cryptocurrencies in the world and from their records, it is obvious that the reward of Bitcoin far outweighs that of the rest of the digital assets. This being said, Ethereum classic, Bitcoin cash, monero, Dash, and others recorded a miners reward less than $1000.
Profit from Mining still Depends on some factors
Though Bitcoin is more profitable than the rest of the cryptocurrencies, how much a miner earns depends on a number of factors as explained below:
Hash Rate: The hash rate in a way depends on computer performance. It is about how fast a computer solves the mathematical puzzle to mine a Bitcoin.
Electricity Rate: The electricity rate is very important in calculating profits. Miners depend on electricity for powering or cooling off, and they pay this energy in Kilowatt.
Power Consumption: Every miner consumes a different amount of power. The profit you make depends on the difference between the amount of Bitcoin you mine and the energy consumption as one of the variables.
Bitcoin Reward Per block: This is the amount obtained after every successful solution for each puzzle. In 2009, it was 50 Bitcoins, then it came to a current value of 12.5 which is expected to be 6.25 in 2020.
Not just these, mining difficulty and Bitcoin price among others are primary determinants of profits earned by miners despite the higher rate of total rewards to its miners.